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Technology Stocks : Vitesse Semiconductor
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To: John A. Paul who wrote (550)4/11/1997 10:17:00 AM
From: Skeptic   of 4710
 
Over time, the price has to grow with the earnings. What uninformed traders do in the short run will be irrelevant a year from now.

I know of no other company with VTSS's growth rate that has anywhere near the same visibility. The book-to-bill is 1.21. The backlog increased from $40M to $46M. There next quarter is 95% booked and the following quarter 80%. Not only are sales growing rapidly, but margins are steadily improving due to increases in capacity utilization and yield improvements. If they could make more chips, they could easily sell them. They have no competition.

The only real threat is problems bringing their new fab online. At worst, this might result in flat earnings for a quarter or two, but this would only be temporary. If everything goes according to plan, capacity will more than double and costs will be halved. If ever there was a company that deserved a high P/E, VTSS is it.
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